>> good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. we have a developing story out of new jersey this morning. a suspected gunman was found dead a couple of hours ago after at least six shots were fired at the garden state plaza mall in new jersey. the gunman fired at least six rounds after entering the complex at around 9:20 eastern time last night. thousands of shoppers fled, but no injuries were reported. scott cohen is on the scene and will bring us the latest in just a few memberships. but first, let's get to some of the morning's top business headlines. china's central banks says it will maintain policy settings to ward off inflationary risks and keep the economy on an even keel. preventing systemic risks in the

economy. it's a fine line to walk, but that is what the central bank is saying there today. speaking of china, growth in the country's services industry edged up in october. a private survey suggesting there are further indications that the economy has stabilized. and australia's central bank announcing it's keeping its cash ready steady at a record low of 2%. the european commission out with its latest forecast this morning saying that europe's economic recovery will continue into the second half of the year, though, as subdued pace. in the meantime, unemployment will remain high through next year. we'll have more from ross westgate about how that is affecting european markets, but rye in and out, andrew, back over to you. >> thank you, becky. jpmorgan has talked with the justice department and is now said to be gaining momentum again after several disagreements which planned to scuttle the impact between the two sides. the latest in the "wall street journal" saying that the comprehensive final terms haven't been reached, but it is possible those terms have been

agreed to this week. among the issues in dispute, whether the bank can count all $1.5 billion in recent settlements it had with fannie mae and freddie mac towards the $13 billion total. the issue being perhaps 1 billion of that might not be included. also on the docket is weather jpmorgan can actually put back some of the 3, 3.5 billion dollars that it's going to on be held liable for relating to its wamu acquisition back to the fdic. also, working with air india after the windshield of an airlines cracked. the 787 has suffered a series of glitches. finally, the latest news on the blackberry saga. the globe and mail reporting that canada made it clear that lenovo was not welcome to bid for the devicemaker. the canadian government did not want a chinese company to buy into blackberry. as a result, lenovo never

submitted a formal bid. >> thank you. back to this morning's developing story. this -- you think about different things. a gunman was found dead at a popular new jersey mall. scott cohen joins us and it's tragic, obviously, for the troubled individual, obviously, scott, for that to happen. but there have been times in the past when i thought when a shooter ends up dead, anyway, it's if only you will not hurt anyone else. i hate to try and look at a positive things about this, scott, but at least no one else was hurt and it was just the individual himself. tell us what happened. >> well, that's right, joe. at least it's that. but it does have a -- about soft targets. just a month and a half after that deadly attack in nairobi, kenya, when a lot of authorities were turning their attention to places like shopping malls. this one, certainly, as you indicated, a lot less devastating. but just before closing last night, 20-year-old ship ard

shoop enters the mall with a rifle that's been modified to look like an ak-47 and begins shooting. he gets off several rounds and the mall goes into lockdown. thousands of people in a 2.5 million square foot shopping mall, a huge, popular shopping mall outside new york city run for their lives. some 400 people were locked down in the mall. and authorities say it appeared that shoop was out for just one thing, suicide. they held a news conference a short time ago. >> we do believe that the main motive for what he did tonight was suicide. based upon what we know, it does not appear that he entered the mall to actually shoot anyone. and i say that only because it appears that he did have ample opportunity to do that and chose not to. >> and the fact that he had that ample opportunity is what's chilling. a senior law enforcement official telling me that they're not sure how he got into the mall with that loaded weapon,

whether it was concealed or not. that said, the response to this incident was said to be textbook. this is something that security officials train for and do drills on all the time. but it was a call that went out shortly after 9:00 yesterday evening about shots fired in the mall. that triggered a mutual aid call around bergen county which is here where paramus is located. everybody showed up, s.w.a.t. teams and the like. they had the mall shut down quickly. this mall is going to be closed for today and it is likely going to take some time to process the scene and let the merchants get back in and prepare it for reopening. we don't know yet about tomorrow. all of this, of course, coming on the cusp of the holiday season. guys. >> and after kenya and everybody was worried about the mall, the lone guy in the mall is everybody's biggest fear, obviously. and -- >> yeah. they may say they don't know how the guns got in -- >> yeah, i don't see any way of

stopping it if someone wants to bring a -- you know, it's a free country. that's one of the downsides to being in the united states, i guess, is that -- >> yeah. that's -- >> down side to freedom. >> that said, joe, we talked to security officials after the kenya attack, you'll remember. and a lot of them said that the perimeter is supposed to be well out into the parking lot. but they're supposed to be looking for people who are coming in, looking for people exhibiting any signs. and, clearly, if this gun was not concealed, there will be questions about where they didn't catch it. because it's not just once you get into the doors of the mall, it's the parking lot and actually beyond that. >> so they're -- >> but there will be a lot of questions in relation. >> there's cameras just everywhere with someone looking at every part of the parking lot -- i mean, you know how these malls in new jersey, they're -- i don't know how many acres they are, but they go all the way around. i can't imagine having to monitor every person on camera

that walks into the mall. but that's being done, scott? >> well, yeah, they can do that. the issue is analyzing all of that data. there's some new technology out there to allow them to do that. this is a 2.5 million square foot mall with a giant parking lot around it. and so they can have cameras on every nook and cranny. but the question is how do they monitor it? how do they make certain? as i said, there is new technology and this mall, by all accounts, was outfitted with a lot of the latest technology for seeing all of that, for analyzing that. not just looking at the pictures, but analyzing any unusual activity, any unusual traffic. but when it's a lone gunman who is out -- -- basically out to kill himself is what authorities believe, that bms becomes harder to determine. >> plenty of woods around. i don't know why you need a mall to kill yourself. but that route 17, route 4, you know right where it is, that's the busiest supposedly

intersection in the country. there more mall out oi out there, has to be the most concentrated part i would think in the whole country or world probably of where malls are. don't you think? garden state, paramus -- >> this is the largest mall at that intersection. >> but there are four corners and then there's malls up the road, up 17, up 4, just everywhere out there. >> right. i mean, this is just a huge commercial area. it's very, very busy. and this is a mall with, you know, there's a macy's, a nordstrom's, every anchor store that you can think of and everything in between. so it's a very pop last destination. we don't know why this young man chose this. >> scott cohen, thank you. thanks for that. i know exactly where you're standing. >> i do, too. this is the closest big mall to us. i go there often. this is the massive one. >> right.

the big one on the -- as you're going west, it's on the left. so that would be the -- >> the southwest of the intersection. >> i have no idea where this is. >> there was so many -- it just reminded me, just bear with me, there was that movie called "soap" and i think sally fields was the superstar. whenever they felt down, she would go out to the paramus mall and all her -- all the people that -- but that was -- >> to go in cogny toe. >> and then she would tell you people would see her and that's how she would rebuild her -- but it was just because there's so many malls out there. i used to live in richwood. >> it's only about five or six miles from here. >> it is. >> and you've never -- >> i don't think i've been to paramus. >> you have different world sxerns, apparently with library stacks or something. >> you know what? i think we should check on the market. >> i had no idea. was your college pretty tame, your experience in college?

>> apparently or maybe i just wasn't in. >> didn't you have a place to go? why was it -- was it the whole thrill of the public things? >> no. why don't we take a look at the markets. >> i don't think anyone understands what we're talking about. >> i don't think they did last night, either. >> why don't we take a look at the markets. markets got off to a strong honor start yesterday. green arrows across the board. you can see right now, dow futures are indicated down by about 45 points. s&p down by about 4.5. oil prices yesterday closed at their lowest level since june, june 26th. they've been flirtding with that $94 level. right now, down around 25 cents to 94.37. the ten-year notoriety now is yielding 27632%. yesterday, the euro hit its lowest level against the dollar. this morning, the dollar is up more against the euro. 1.3493. it's down against both the yen and the pound. if you take a look at gold

prices, you'll see gold is trading at 1,312 an ounce on. right now, it's time for the global markets report. ross westgate is standing by in london and, ross, we've been talking about what some of the central banks around the globe have been saying. how is that playing there in europe? >> yeah, with cautious sentiment today, becky. a very good morning to you. around about 7 to 33, decliners outpacing advancers on the dow jones stoxx 600. we've had a slightly down beat assessment from the european commission than we thought. they downgraded some of their growth forecasts for this year. and 2013 and '14. and unemployment is going to keep ticking up. the moment in the eurozone, we've got record levels of unemployment and inflation, the last print of core inflation matching the eurozone low of 0.8%. we've got ecb meeting coming up on thursday. the pressure is ratcheting up on them to do something. but, of course, you could lay the blame squarely on government in the eurozone for not doing more to stimulate their own

growth. the ftse is 100 down 0.5%. the xetra dak is down 0.3%. ftse mib currently down 0.3%. cac 40 down 0.4%. in the autos sector, bmw off 3.25% slipping a yield. their third quarter figures, blaming high tech costs for a fall in growth earnings. they did pay less income tax over the period, which meant that they still increase third quarter net profit to 1.3 billion euros. but they had been making huge investments into their new electric series of cars, the bmwi3 has launched an all-electric car. big investment there. they may win that one, but at the moment, just hurting profits a little bit. nissan down 10% today. the japanese automaker. the market was closed we couldn't react to the figures out on friday which we talked about. but essentially, they had a 20% cut in their full year profit outlook and the stock having a big reaction today.

chief operating officer is stepping down. take a look at gilt, as well. pound stronger today. gilt yields are heading higher, 2.8%. we had a strong print of services pmi today. it's around 0.6% of the british economy, stronger than expected. ticked up again from september. the composite number now, the high since 1998. new business, the highest since records began in 1998 and new business, the same, as well. we're now pointing to quarterly gdp growth of 1.23% for the fourth quarter. analyst res now saying the uk, there are some forecasts out there that may say we may get near 3% annual gdp for 2014. that's a long way up from the 1.5% that others have been talking about. that is where we stand right now. back to you. >> okay. thank you, ross. we'll hope for the best here. you've got some red there. in washington is a top economic diploma diplomate, the treasury department that likely brainard

is going to step down from her post on friday. she has served as undersecretary of the treasury for international affairs since 2010 and played a key role in pushing china towards a more flexible currency. pressing europe to tackle its debt crisis more aggressively. and there has been -- >> don't bury the lead. >> this is why she's tepg down, so sheblg seat her on the fed. >> she's going to be on the fed. that's basically what happened. >> do you view this as intuition? >> more than intuition. >> i have real sources. >> yeah? >> yeah, who can tell you that she is up for this. that's what this is all about. i was surprised at all the stories that were written about this were written the way they were. i would have started when she's up for this job and she's leaving. whereas the others were she is leaving and she may be up for this job. >> do the times have room or did

they leave any room for -- >> you know, the whole issue was dedicated to deblaso this morning. >> there was. >> no, i know where -- let me move on. >> okay. because there's one person that runs the fed. and then an around in today's "wall street journal" talking about the issues with obama care, namely that young people appear to be avoiding the health care plans. early coverage is lower than expected. that's raising concerns that insurers, if it's just older people, the -- it would be much more expensive because they have more health problems, they could drive up prices for everyone by forcing them to spread costs around, but the white house counters that by saying that in massachusetts when it was introduced, the young people waited until the last minute to do it and them they all did it in the last minute. so it's going according to planned. we'll see what finally works.

well, no, some day they will have to actually release the numbers when they know the numbers if anyone does sign up. and then there's a bill to ban workplace discrimination against gays narrowly cleared a procedural road block in the senate with a support of a handful of republicans. passage is said to be likely by the end of this week. the measure will fois an uphill climb in the house where the speaker john boehner opposes it. and i was surprised, there are still some laws on the books that you're allowed to discriminate in certain places, which is -- not everyone i think realizes that at this point in time because so many things have changed recently. right? >> right. it's election day today. did you know this? >> i did. well, i saw the bounce in your step as you came walking in here. >> walking in here. >> he laughs at anything. i laughs at your jokes. he -- >> right. >> but you are, you're in a good

mood. hope and change. >> hope and change. >> 2.0, hope and change for new york city. >> i don't know about that. >> i hope you get -- i hope my 15 cents over dollar you make. i do. 15 cents. >> yesterday you told me that you hoped that i speak out to hundreds -- >> i want you to -- right. i want you to have -- a second job to pay the taxes on your first job. >> when i told you i was going to become your marion neighbor in new jersey, you said you don't want that, either. >> no, i don't want that, either. it's complicated. >> you will never get your code to the gates in my neighborhood. we'll keep changing it if you ever do find out what it is. >> one, two, three, four. >> i can never remember that, though. >> that's what it is for most gates. anyway, joining us now with a look at the key rates, ben white, chief economic correspondent at politico and

our own beltway dan. >> you embrace that. >> fine with me. >> quick analysis on election day. is there going to be any surprise today at all in her? >> there won't be any surprise. the question is how big is christie's margin in "morning joe"? i think it installs him as an early front-runner for the republican nomination. in virginia, the attorney general is going to lose, likely badly to terry mccaulliff. who republicans thought would be an easy candidate to beat. >> wa does that say? >> that tells us that the hard right tea party conservativivism is not faring very well right now, particularly in swing states like virginia. it does better in the, you know, hard red states, but not in a purple state like virginia. and it means that christie, a moderate, is a possibility for 2016 which a lot of people wouldn't have thought.

>> it means there's still a problem for republicans that they can't consolidate the two bases of their party. >> exactly. the tea party is strong. turns out for elections is not a majority party in a swing state. it is a problem for them 37 they can't, you know -- >> let's talk about election day today, but let's talk about christie 2016. it's more fun. >> yeah. >> you have a colleague, rachel base, who wrote a business in politico this morning. >> property taxes. >> -- on property taxes. the question is, how many issues out there could dog him and is he too moderate for the republican party? >> those are all interesting questions. on the tax question, he's going to get hit by the fact that he promised to lower property taxes in new jersey and hasn't done that. he restrained the growth of property taxes. >> do you think he's going to get hit with -- >> being a tax razor who is not hard enough on fiscal issues. certainly not on social issue. he's going to get hit from the

right. i think he can play nationally. if he goes against hillary clinton, that would be an interesting base. >> now, the rules in new jersey are very complicated. you can't go raise money from wall street without getting out of his job first. >> exactly. which is one of the reasons he didn't get on the ticket with romney. >> when would you have to make that decision? >> presumably, if he wants to raise a lot of money from wall street going into 2015, he would have to make it sometime early 2015 i would think if you want to start raising money on wall street for late 2015 primary process, 2016 primary process. >> if he wants to move on this, he has to be in and out in the next year and a half. >> unless he decides that he can get enough money in another way. or he's got outside groups who will support him early on in the primary. but i don't think he's made a decision. i think it's possible that he could ultimately have to leave office to run for president in order to raise kind of money on wall street that he wants to.

that's not a foregone conclusion that he can do it that way. >> he had guys lined up last tooit time. i could see he has five or six guys waiting in the wings. >> regardless if you have them lined up and you know they're going to be there later, you can wait it out. >> but ultimately, i think he probably has to raise the call. if he wants to raise the money it's going the take, you have to get out of the statehouse. >> is there an independent running down in virginia, too? >> yeah, there's an independent. you know, take some votes away, i would assume, from mccaulliff. >> i'm just wondering what would be a disappointing -- what would point to obama care angst in this? >> a narrower win for mccaulliff, four of five points as opposed to 8 or 9. there's no question obama care will take some away from him. the problem is, i donhi virginians, particularly northern virginians in the d.c.

suburbs see as kuchinelli being too in line with the tea party, wants to she shut down the government, and that doesn't resinate, particularly in northern virginia where everybody works for the government. >> is he actually a government shutdown proopponent? >> can you chinelli? >> yeah. >> i don't remember him talking that much about it. >> who is your lineup on the republican side for 2016? >> that's a really hard one. right now, i think christie, maybe. but you mean in terms of the possibly candidates, christie, case itch in ohio, bobby gindall is pretty good. rand paul and ted cruz, i don't see it happening. they're going to run and they'll run it off for who is the tea party candidate, but they're knot not electable nationals. >> is getting it out there now actually helped? >> he's laundering some of that stuff early. i think it helps. none of it is disqualifying.

>> it was known in the -- and if he gets 60% in the second one and has been a governor for four years, it's like that -- >> if he reads a book, mitt romney's people thought that if this stuff got out, not only could they not put him on their own ticket, that he wouldn't -- >> mitt romney's people thought it was okay to say we have an etch a sketch, not to count the private equities, they thought it was okay to hide after the first debate. i'll give you a list. i dealt with some of those people. >> there is nothing too problematic. it's not like he was doing bernie madoff city, but that's a 30-second ad saying this guy was a wall street lobbyist at the same time the biggest crisis in history hit us. he'll get tagged with those things.

i don't think any of them disqualify him. >> beltway ben. >> you're very comfortable. >> he's been around the table. >> it's method acting. you have to do the -- if you feel like going -- "the godfather"? >> yeah. >> that was his best prove where you would do this for no reason. >> you get me talking politics, it's the easiest thing in the world. i'm outside the beltway, too the. >> but you have lots of sources inside the beltway. >> he also has a lot of sources on wall street. >> you have sources everywhere. you have sources coming out of your nose. >> okay. coming up, the next time you're looking for help, google says it has the answer. this is -- i don't know, andrew. go get some jokes from a guy, maybe. a new service that let's consumers pay for live video chats on any subject, maybe, you know, wherever you have problems you can get some advice.

but first, some squawk sports news. what to do in the stacks, for example? the chicago bears upset the green bay packers 27-20 last night. new orleans got beat by the jets. that's why they play these games every sunday or monday. >> any given sunday. >> that creates a three-way tie atop the nfc north. packers quarterback aaron rodgers hurt his nonthrowing shoulder on the team's first series, unfortunately, and then left the game. we'll be right back. peace of mind is important when you're running a successful business.

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welcome back, everybody. this is our daily edge focused on giving business leaders a edge up. google helpouts can provide advice on everything from step by step turkey cooking instructions to major counseling. the price is set by each individual provider. this is a step beyond youtube. right now, you can get any of these things, like how to cook a turkey, how to make an egg. this is a live one where the person talks back. >> the problem is everyone is going to become an expert, so then they're going to sell they are wears, if you will, online and say, you know, you can call me. it's basically conference calls for experts, right? >> yeah. the thing i thought was interesting about this is you could get a private conference

call live with a health expert. and they are going to check out the credentials of everyone before they're allowed to participate. >> how do they vet all these people? experts or something like that? >> well, i think some of them are going to be weight watchers. they're going to be coming from companies that are already signed up. there was a makeup company that's signed up with them, too. they are supposed to be checking all the health care -- >> do we know what the prices are? >> don't know. but i know that they get 20% of whatever the cost is for it. they get 20%. >> it's cheaper than in person. fashion, fitness, computers, marriage -- marriage counseling. >> if you can call up and say i'm having a problem -- >> marriage counseling, you and your wife sit there looking at a

computer. then it makes me think you're going to get on to what the internet is good for. you know what i mean? or you already can talk to somebody like that if you have a problem. aren't there chats -- >> i don't know about those things. >> you have to idea? >> what are you talking about? >> i don't know. chat rooms where you can say i've got this problem or that problem. >> i've never heard of that. i don't even know wa you're talking about. >> and you know what? we don't even play music any more. >> i'm ig cog nieto, as they say. you never have given your credit card. but it doesn't matter. you're traceable. >> i am. edward snowden. >> what are you wearing, joe? anyway, beijing is going to slash the city's new car sales by almost 40% next year. the goal is to curb vehicle emotion e emissions.

it is goc to be a serious curb on sales over there. >> it's awful. we have conversations about debates about global warming and -- >> this has nothing to do with -- this is horrible car pollution. we want clean air and clean water. >> and this air is awful. >> this is the part of the pollution that's put by that whole sort of demonization of co2. you forget clean air and clean water. >> people can combine the two say they're wacky environmentalists. clean air and clean water is what we want. >> yes. so it's very frustrating for me. when we come whack, we're going to talk about what traders are doing ahead of friday's jobs report. at the top of the hour, we'll be

welcoming barry sternling. he sounds off on politics, real estate and much more. "squawk box" will be right back. it's as simple as this. at bny mellon, our business is investments. managing them, moving them, making them work. we oversee 20% of the world's financial assets.

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investments, why don't we start off talking about this jobs report. this is going the be a number that we don't necessarily see as a clean one. wa do you do with it? >> yeah. you have to take it in conjunction with the reports that came after it. it's not going to be able to stand alone and really no single jobs report should stand alone. you're going to pay attention to the revisions and look at how things are going.. you're going to look at hours worked and hourly earning. but truly you're going to have to wait for the subsequent month and take a look at the reports together. >> it will be hard to clean information about whether that was happening or not. >> yeah, i think it l dikt. it appears that it was in certain sectors, but then you have the ism numbers which have been very strong. so there's a lot of conflicting data. i don't think it's out of the question that we have another shutdown in the spring.

>> what does your get tell you where we stand? are we looking at a decent economy? shut going to be set up for tapering? >> i don't think we're setting up for tapering. they're compensating for fiscal malaise. we're having some in the new research done out of the fed which shows in fact we should be looking at a lower unemployment rarity of a 6% rather than a 6.5%. they say say they're reducing their unemployment threshold for when they start. ultimately, i think that would be considered a softer fed. which you -- i mean, there's very strong underlying factors of the economy. housing is doing quite well. that is going to continue to add to growth, about 40 or 50 basis points. and that's important. and we have the bright spot from

technology and the bright spot from oil exports. >> i think that, you know, the u.s. economy continues to profits resilience. it's a perfect example aus just highlighted, corporate america is doing well kwet where i might disagree a little bit is in looking at the fed. i continue to believe that these terrible asset purchases every month are having a smaller and smaller impact on economic growth in the markets. i think it should be pretty clear, the law of on diminishing returns has kicked in.

i think that tapering is still probably on for the first time in the fourth quarter. >> he said he is the north poll of inflation hawks and yet he has patience with this whole idea of beginning the taper. we're looking at inflation that is still below the fed's target range on the low end. he's not in a rush. >> let's be clear. tapering does not necessarily spell tightening. i don't think that interest rates are going to raise the fed funds rate anytime soon. >> but you have to start the taper. >> you have to start the tapering sometimes. and you have to ask this $85 billion in purchase every single month, how much is that having an impact on growth? is it going to move interest rates a whole lot more from here and is that really what consumers are waiting for to get more involved in this economy? >> so if you think the tapering begins and the fed maybe doesn't that without a huge back drop for a really strong economy at that point, so maybe they're

talking about cumulative gains that they've made at that point with the jobs market. so you're not necessarily talking about resurgence in the economy. >> you have to look at the fed's balance sheet to recognize what it's done over the past few years and understand what it's really doing when it talks about tapering is slowing down the pace of purchasing. >> if you have to classify the markets as getting bigger or smaller -- >> and it's a bigger and smaller pace. >> and the fed looks at flow, not stock. if they say we are going to taper, but we are going to make the threshold for unemployment lower, then you're looking at a situation where the market reads that as sort of neutral. and the big issue here is what happens with mortgage rates? we're started to see a drop in the mortgage debts.

>> i think when you have a situation of disinflation, an aging population with a lot of dead, it's going to be difficult. >> that sounds like japan. >> unfortunately it does sound like japan. we are not as bad as japan. japan had a period where their working age population was falling. ours is rising at a slower rate. >> so, joe, you add all that up, wa do you do when the indexes are sitting at their all-time highs? >> i believe the earnings continue to grow, and i think

that multiples are going to moderately expand next year on the back of improving confidence. putting aside all the nonsense in washington, you have to ask yours yourself, are you likely to see a bounceback or is it likely to stay depressed indefinitely? i would say over the long run, you're going to see some better runs. >> thank you both for coming in this morning. coming up, today's "squawk box" planner, the events you're going to try to know about before heading into the office. plus, slamming a high profile book about her husband. nice, right? backing her man. more of that when "squawk box" comes right back. customer erin swenson ordered shoes from us online

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. welcome back to "squawk box." it is now time for the "squawk box" planner. on today's agenda, check this out. we have quarterly results coming from directv, michael kors and aol before the bell. aol's ceo tim armstrong will join us first on cnbc at 7:10 eastern time, just a little while from now. after the bell, watch for results from tesla. the white house resumed a schedule of east wing and resident tours today. they were canceled in march due to secret service staffing reductions. richmond fed president jeff lacker and john williams will be delivering remarks at separate events. that could move markets. we're going to get our own taste of fed speak when fed boston

erica rosengren joins steve liesman live on this broadcast. >> andrew, thank you. calling it a lopsided and misleading portrait of the people at amazon, mac kenzy slams her husband's, jeff bezos book. >> and just reading some of what she said, you know, to make a book interesting, sometimes you need to embellish or things that may seem small at the time to people involved, that becomes -- i've seen that happen. >> i think they took some of the narrative tricks to make it happen. this is a book that jeff bezos does not cooperate with. i heard the author interviewed on npr. it sounds like an interesting

book. >> it's possible that the whole story could be interesting to some extent, but they couldn't have these major -- not everything is a drama, right? i can it's nice that she's -- >> standing up for him. >> yes. >> sure. >> i didn't like it when rupert got divorced. >> all right. when we come back, twitter preparing to go public this week. the company laid out more than 30 pages of risk factors for the business and this public filing. we're going to talk about the risks and rewards right after this. of business. they always have. they always will. that's why you take charge of your future. your retirement. ♪ ameriprise advisors can help you like they've helped millions of others.

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welcome back to "squawk box" this morning. twitter's ipo expected to price in just about a day. and while there's a lot of excitement around the deal, there's also ha laundry list of potential risks raising eyebrows this morning. and kayla tausche joins us with more. some of those risk factors. >> it's tough to say, isn't it? the books for wall street close today around noon. and it's expected there's going to be high demand. they raised the price range yesterday. . the big question is whether they'll raise the number of shares. it's oversubscribed. retail investors unable to get

in on this one. that's the fear they'll be buying in the aftermarket. analysts are bullish, wall street is buller, there are a lot of risks, 32 pages of them roughly standard for some of these. some of them are pretty grave. for instance, failure to expand internationally. the company has the majority of its users outside the u.s. they may never turn a profit. they said the business model is untested and never achieved profitability. they may never. >> do you think turn a profit is one of the risks? >> it's pretty stark language. competition for advertisers who might choose to go elsewhere. intellectual property continues to be an issue. a lot of people have said you might be able to recreate twitter if you're able to get that i.p. always conservative, and some of the fun things about going through these ipo filings, or some of the quirkier risks about what the company views as potential risks to its business model. twitter says bad internet service, they rely on other internet infrastructure and lose users.

but they also say they basically need to keep their enemies closer. if search engines like google, bing are at places like market and google play, don't rank twitter toward the top, people might not download, might not go to the site. they say they need to be up there, one of the most popular places to be. big government, they say new laws regulations, censorship, and this heightened awareness about consumer privacy and data protection especially abroad could hurt its expansion. then eyeballs risk. they say if the real or perceived inaccuracies in such metrics used to calculate their business success, that could hurt them, i.e., they calculate their revenue per time line view. so per thousand time line views. that's basically eyeballs. that's what a lot of detractors have been pointing to. this is really the metric we think of during the dot com bubble. can you measure it? and then the close kimono, could

be affected as an emerging growth company to disclose less about the financials. remember, it filed for an ipo under the jobs act. it doesn't have to disclose as much as a fully mature public company does. and it's unclear how they'll be using that law to their advantage. the interesting thing is there's no key man clause. there's nothing that says our ceo, our coo is so irreplaceable that if we lose that person, that would be really harmful to our business model. facebook says if we lose mark zuckerberg or sheryl samberg, same thing. >> it's a good sign. >> it's a good sign. it means if the ceo leaves, then, you can replace them with someone just as able to do that job. some people are saying, is there someone who has not every single stake tied up in this company? is that a bad thing? but i think it's a good thing here. analysts on average have $44 price target. some are saying $26 per share,

$1 above that raised range, it could still go higher. but, of course, we'll have to see. >> well, if you went and looked at the people that you think of as internet stocks and look at where those stocks were when facebook priced and where they are now. they've all -- what are the stocks up? what is google up? what is amazon up? they're all up. >> unbelievable. >> right. and so is facebook. now it's a much better environment. >> what about a zynga. >> huh? that doesn't count. >> already trading fairly low. >> right, but we know what ruz real or not at the time. groupon. >> they started falling in tandem with facebook. one thing we'll be exploring is how different the markets are. >> i'd much rather come public now. >> thank you. when we come back, we'll welcome our guest host this morning, barry sternlicht.

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"squawk box" checks in with barry sternlicht, weighs in on obama care, his recent deal, and how he wants to revolutionize the hotel world. >> becoming the emperor and empress of japan. used to frequent the hotel constantly. >> we'll take it. >> earnings from online media giant aol. we log on to the ad market and talk social media with tim armstrong. plus, looking to shake up obama care joshua cushner joins us to talk about his new venture.

plus his thoughts on twitter going public. second hour of "squawk box" begins right now. welcome back to "squawk box" right here on cnbc. i'm andrew ross sorkin along with becky quick and joe kernan this morning. we do have red arrows this morning. indicating that the dow would open off about 43 points, the s&p 500 would open off about 4 1/2 points and nasdaq down about 9 1/2 points. we also have morning headlines for you this morning, including jpmorgan chase and the justice department. they now may be moving closer to a settlement in the case involving the sale of mortgage securities during the financial crisis. that deal reportedly could come this week after negotiations with the uncertainunsuccessful f the disagreements. though it's an off-year

election, there are several races of interest around the country. in the east, we have new jersey governor chris christie bidding for reelection and amid speculation he's going to be running for the president in 2016. we'll see whether that comes true. also, new york city will be getting a new mayor after 12 years under mayor michael bloomberg. also, voters in houston, they're going to be deciding whether one of the city's best-known buildings will be saved or torn down. the first indoor baseball and football stadium. a referendum on today's ballot would authorize a bond offering to transform it into an exhibition center. a suspected gunman was found dead just a couple of hours ago after at least six shots were fired at the garden state plaza mall. authorities say that the gunman fired at least six rounds after

entering the complex at around 9:20 p.m. last night. thousands of shoppers fled, but no injuries were reported. our scott cohen joins us from outside that mall this morning. scott? >> good morning, becky. again, it raises the question about safety in big public places like this if a deadly mall siege in africa a month and a half ago that left 67 people dead was a little bit too remote. this one hits closer to home. though, the human toll is thankfully a lot less. it happened just before closing time here at the garden state plaza in paramus, new jersey. a huge shopping mall, about 2 1/2 million square feet. a gunman dressed in black wearing a biker helmet walked in, he was carrying a -- apparently a rifle that was modified to look like an a.k.-47 and began shooting. shoppers who are sadly now attuned to the potential for gunfire in public places ran for their lives.

>> we just be working inside the store and we hear -- i hear three shots. one next to the other one next to the other. and i opened the front doors for stores and i saw the security guard, all security guard, they start screaming and people get out, everybody out. everybody out. >> the mall locked down for much of the night while they searched for the gunman who turns out to be richard shoop, 20 years old from nearby new jersey. apparently has a history of drug abuse, suicide was the apparent motive the authorities say. and in that regard he was successful. no one else was hurt. and the authorities were saying the response here was textbook. they responded from all over the area, s.w.a.t. teams and the like in a matter of minutes. this is something that the authorities here have been training for for many, many

years. westfield shopping centers owns this mall also the mall in kenya. saying in a statement yesterday's event heightens a state of awareness and concern. there will bequestions about how he got into the mall with a loaded gun. cameras in the parking lot, but somehow he got in, certainly raised some havoc, at least in terms of terror among the shoppers and took his own life. >> okay, scott, thank you. yep, this is definitely something to puts him back on the radar screen. ended, unfortunately, for the guy that offed himself but no one else, thankfully. our guest host this morning, one of the biggest players in the private and equity space, barry sternlicht, chairman and ceo, he's in the prime of life.

you're in your early 50s, right? you're wheeling and dealing. >> only as old as you feel. >> you're not resting on your laurels at all. i like this deal with tripoint. so you buy -- you've got timberland, is that places to build the home or the wood to use building the home? >> yesterday's announcement was our home builder, which -- >> tripoint. >> tripoint. we started in 2010 and took it public earlier this year. very successful for our fund investors and merged it with a company called rico which is warehousers of forest products and they had a subsidiary that was a home builder. we will quadruple in size and establish the companies -- >> what do you get? >> we get a lot of really good land. >> you get land to build the houses on or timber -- >> the house subsidiary -- >> they're focusing on the timber and we're going to focus on their great land holdings which expands our footprint. >> in the past, that's what

kills home builders when they buy land and it costs too much. and land is really -- prices can move. >> yeah, well, it's mostly stock, it's a stock for stock -- it's actually a fancy structure called the reverse mortgage trust. which is really, we kind of -- we're smaller, about 500 million in market cap, 2.7 billion. they merge into us, we're controlling the company. i'll be chairman of the company but we'll have 30,000 lots and some very -- we pick up houston, texas, d.c., seattle, l.a., great land in san diego. and the team that we have at tripoint is world class. i knew the ceo for 25 years before we put him into business. i think warehouse management team agreed and chose them even though i don't believe we're the high bidder because it was a long-term partnership. they own 80% of the company, we owned 20% of the company. >> how does that change the dynamic? you're the chairman of the company. >> yeah. >> but you don't really control

the company now. >> we have five of the directors we get to appoint. we have the ceo, cfo and the c.o.o. are the tripoint heads. >> they were missing that? >> they had very good operating divisions under different brands, trend maker, they had different home building companies and different markets. so we're providing sort of the guidance, capital allocation, strategy, we'll go through the assets we bought probably choose to sell some off, reinvest in others. but the core for us was the california home building divisions which we'll have almost 2/3 of our lots in california, which i think is really -- it's interesting. on last thursday, we announced from our mortgage reit that we would be spitting out our home rental business. and privately we own a lot of lots. so we have a really good view of the housing market. and i think investors are confused. they look at interest rates backing up, they've been hitting the housing stocks, i think you're in a five-year cycle for housing that will be directed --

it'll be bumpy, but you're going north because there's a demand in the housing sector. >> you didn't have to start a home builder in 2010. >> it was a little contrarian, but it worked out. >> and i think you did this -- i think you could have done it a bumplg of other ways but you said, i'm going to do it because i can. i'm going to look like i'm doing a reverse -- it's a really elegant way. you could have done it another way, but you liked being able to do it that way. >> i had to learn something new. warehouse's idea. they wanted to do it. it was tax efficient for their shareholders. >> it wasn't your idea. that's big of you to admit. >> it wasn't. >> you saw how well it would work. >> well, makes the transaction accretive to tripoint shareholders. >> which other deals? you mentioned the single family into a reit. you did other ones recently, didn't you? >> we've been busy in real estate, in europe. >> where? >> well, we bought a large office complex in czechoslovakia

of all things. we've been buying stuff in ireland. >> we've been hearing. >> we've also been buying office now which is kind of new. >> we've been hearing about how europe has turned around. is that why you've been looking? >> you know, you can -- in the u.s. -- >> people like that. >> are you trying to do as many deals as you possibly can as long as the fed is like it is? >> it's an interesting time. i said you have a subsidized interest rate curve and proper

yields are sticking higher than they are because everybody expects rates to go up. in the yield let's say 6%, 7% of property and i can borrow at 2.5%, 3%. >> that would be a yes? >> that would be a yes. except, you know, the fed is playing a dangerous game and we can talk about that too if you'd like. >> i like you guys that are, you know, quadrupling your net worth but still looking at them and looking a gift horse in the mouth. but it's -- you tell them to stop now? you want them to stop or not? >> i want them to stop. >> you do? >> yeah. >> you need them to stop today? >> yeah, he should stop. they should knock this off. this is bad. this is a heroin addiction. the more you get on it, the worse it's going to get. >> we can see it already, can't we? we were going to stop and then we said, well, we'll stop a little bit later because of -- >> i think he didn't -- he didn't -- he knew it was coming with the debt ceiling. so i think -- and with yellen coming in --

>> doesn't mean you can't -- >> let it happen on yellen's watch. let her taper, but she's going to be -- >> but $5 billion to $10 billion would've killed us. >> this is not good. this is not good. and this is not smart and you get to the race, you know, now that we think the europeans might have to respond to this. it's one thing when we had a $1 trillion deficit and we were printing $1 trillion now we have a $650 billion deficit and still doing $1 trillion of paper. it's even more accommodative than it was last year. and -- they could at least match the deficit what they're tapering. they're not, they're actually printing more money than the deficit is this year. >> it's very, very, very bad. >> he got more -- he was more strident than ever in how it makes sense because now we're seeing lower inflation in europe. we've got no prospect for inflation. so his point was because we were at zero and zero interest rate environment, you're worried

about pushing, this is all they can do. >> we're in a heroin addiction. >> there's no negative -- >> pull the needle out here. >> how? what are the negative consequences going to be? >> it's -- i think you don't even know. it's never been done before. >> no. >> inflation is -- you think it's something -- >> tell you what, my friends, all my friends that are money managers, these guys john griffin, i think the people are sitting on the edge of their chairs -- they're much closer to sell button than they ever were before, especially after having a 24% s&p year whatever we're having. so i think if they get nervous, you can see corrections, the volatility will come back instantly. >> in the stock market? >> yeah. >> even though the market's up on -- >> why don't they increase short rates? i mean, the curve, if they increase short rates, the long end probably doesn't go up very much. it may stay here because it's weak. at least it'll give my parents a reason to buy cds and not invest in stuff they don't understand. and it's asset inflation across the board. >> your parents are still on

their own with you worth $10 billion or so? still invest, still worried about their cd rates? >> my parents, yes. my mom is -- my dad, i think, is the oldest gentleman to take the -- became the stockbroker at 67 and he's 84. and my mom is like -- i just had lunch with them and my mom's like, i'm doing well in the market, aren't i, honey? my father's favorite line is, yeah. has your mom made a lot. yeah, she started a lot and now we have a little. >> small fortune. >> she's actually good. they're good. thank you. >> all right. >> and you're with us for the rest of the morning. up next, earnings from aol crossing the wires a short time ago. the ceo tim armstrong is going to give us an update on business and the importance of online content. and later, joshua kushner is looking to disrupt obama care. we'll ask him about his new venture and talk about the twitter ipo.

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welcome back to "squawk box," aol's earnings crossing the wires. the company earning 55 cents a share for the third quarter. revenue also above consensus. joining us now to talk about, tim armstrong the chairman and ceo of aol first here on cnbc. good morning to you, tim.

>> hey, andrew, how you doing? >> i'm great, thank you. looks like you're great, as well. given the numbers. the big question, i think is, you know, i looked at adapt tv was one of your big acquisitions just closed. looks like it's already producing some nice numbers for you. is that going to be consistent? how do we think about those numbers? >> sure, take one step back. in the middle of the disruption of technology and media. the results today point to the three things we've really been focused on. one is the buildout of consumer brands at a global level. second is a big, deep investment in video and happy to talk more about that. and the third is really the advertising technology stock and the ability to take advertising, which was manual and make it automated. so when you look at adapt tv, adapt tv really hits those last two bullet points, which is expansion of video because i think they have the best video marketplace for advertising.

and the second piece is the technology stack that they have a market effect for buyers and sellers. results today, essentially are improvements across the entire board for aol. advertising revenue lines, consumer traffic and then the real technology stock behind the future of where the company's going. we're excited about the results today. >> of those three, tim, where do you see the most upside? >> we see upside both in the advertising technology stock business which is related to video as well as the global brands group. the global brands group both -- they -- both of those areas had double digit revenue growth. the brands group got back to adjusted ebitda which means earnings are getting better against content. but the big megatrend in advertising right now in marketing is the automation of advertising. and just as automation hit wall street is hitting madison avenue and aol has a big investment in this area over the last three years and it's really starting to pay off. the technology platform side has tremendous upside.

>> so that has an upside, but the downside i imagine is that advertising by default and the commoditization of advertising means lower rates. >> well, actually the opposite is true and when people look at our earnings, they're going to see interesting things, which i think is going to buck the trend of what people have been thinking about the future of advertising, which is our pricing improved even as automation has gone up, our pricing has gone up, as well. and that is a real function and a deep function of us focusing on noncommoditized areas of building brands. and while the world sees technology as a kmodization commoditization danger, we see it as an ability to scale both the results, the transparency, and as well as to put more technology behind bigger brands. and that brand spend in what people want to spend on is something that is not a commoditized area and won't be a commoditized area. and we believe that pricing in the future will be stable to up in terms of our strategy.

>> tim, while we have you here, twitter going public later this week, how do you feel about twitter as a competitor? >> i think twitter's a major partner of ours and the moves they're making, going to become a bigger partner. we are very big fans of dick costello and the team at twitter, we're working on distribution ideas for them on content and advertising. i think you're seeing people want to adopt more realtime information and twitter's a great platform for that. from a competitive standpoint, we don't look at them as competitive. i'd say we're going to be bigger partners with twitter in the future. >> and in the broadcast arena or tv, broad band arena, what should we be looking for? i just wonder whether that opens up a whole new avenue if he succeeds. >> i think there is a megatrend and the reason we're investing so heavily in content and video is there's 700 million smartphones on the planet on fairly good connections. if you look forward three or four years, you're going to have

2 1/2 3 billion smartphones on good connections and good screens. and sight sound and motions has trumped every form of media. i believe the investments barry's making, the investment at netflix, at aol on, is allowing us, we became number two in content views and number one in ad views for video. that megatrend is not only on the desk top and over the top but specifically on smartphones. and the more you can let people watch video anywhere they want to be, i think that is a megatrend that we are doubling down on and you see other companies, as well, and i think it's a consumer passion and love. >> tim, huffington post, how important to the brand, you know, almost seems like every six months or a year there's a rumor that floats around that arianna huffington's going to want to buy the business back from aol or something's going to happen. what's the future of "huffington post" with aol?

>> it's been a megasuccess. we're in five continents. we announced huff post. just passed 500 million video views since we launched it, over 10,000 guests. i think it's hard to argue that it would be position any better than it is inside aol. we have partners approaching us to help us scale. and we've signed a number of partnerships across the globe. but aol owns the "huffington post" because it's a tremendous asset and brand and you're going to see us invest in the huffington post. >> appreciate it. this is one of the great stock success stories. just look in the past year or two. jim cramer was talking about it the other day. anyway, thank you. >> thanks, andrew. >> appreciate it. coming up, a closer look at oil and currencies, the "squawk box" trading box just minutes away. then joshua kushner will talk

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things that have been happening in the markets. right now, though, take a look at what's moving oil prices this morning. down another 32 cents. been testing at $94 level looking at the lowest levels of oil since june. the euro sitting at 1 1/2 month high against the dollar, 1.3492. and dow futures are down by about 49 points below fair value. "squawk box" will be right back. when we made our commitment to the gulf, bp had two big goals:

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welcome back to "squawk box," everyone. let's get caught up on some of the earnings reports. michael kors reported profit of 71 cents a share, 3 cents better than expected. also raised the forecast for the year. the maker of medical supplies also gave a full-year forecast slightly below the street's consensus. but it does have a history of conservative forecast.

and regeneron pharmaceutical announced it beat estimates by 35 cents. its results were helped by growing sales of treatments for macular degeneration. >> that's $8 billion market cap now. let's get a check on oil and currency levels. joining us now is carl larry. we have boris from bks, and i mentioned those inflation numbers from europe and he got all -- that really got him going. gives cover to the fed to do what they want to do. but also means the race to the bottom -- you know, we won't necessarily see 150 on the reur because they're going to be as accommodative as us here. >> it was an interesting

interview. very telling. today's ism services is going to be critical. not only because it's the largest part of the u.s. economy. it's usually a very good forecast. so traders are going to be watching that closely. if we have a relatively decent number, then i think the dollar actually has a lot of oomph behind it. we have what i call the rocky balboa economy where we take a punch and able to stand back up. and that would make the market be much more convinced that qe is coming sooner rather than later. already a little bit of a shift from the euro to the dollar. i think this could give it further impetus. >> the shocker of the nontapering gave us 1.38 or 1.39, and now that's over and the next move is tapering. that moves over, don't you think? and they're going the other way over there. they're behind us in everything. and they're going to catch up in terms of being -- of more qe, right? >> and to your point, they came out with estimates very, very dejected estimates saying negative growth this year and

only expect to have positive growth starting next year. the pressure on the ecb to become a lot more accommodative is stronger. >> good, 1.25, before i even called the travel agent. i need 1.25. hey, carl -- >> yeah. >> in terms of oil, it's a little weird to see it -- if the dollar had been strengthening, i can understand. gas, i filled up today. it's almost $3 a gallon regular. >> yep. >> what has happened? has that been a reflection of how weak global growth is right now? >> you know, you hit it right on the nose. if anything, oil -- i've always said this, i'm super bullish. but my one weakness always is that if the economy does, you know, bad, the oil prices are going to go bad. and right now, demand's just really not there whether it's gasoline demand or diesel demand or jet fuel demand. we're not seeing it right now. there's something to be said for weather, but we're just not doing it.

>> you also -- it scares me that you say -- i don't want them to be important. i'm not going to say anything about secretary kerry. is he going to be successful here? they're so p.o.'ed at this point. >> they are. and i say it's important, i don't think it's important to us, i think it's important to them. i think for the first time in a long time, we're in the driver's seat here, we're the ones -- we're the ones that are saying yes or no on syria or libya or egypt. at the end of the day, we're becoming really oil dependent on our own production here. >> yeah. >> so what do we bring in? it matters to them, important to them, not so much us anymore. >> i wonder if they really can -- they must. they're smart. they can see the writing on the wall with the energy boom here in this country, right?

>> well, they've only have -- they only have, you know, one majoport. outside of that, what are you looking at next? dates, i think is their second biggest export. >> yeah. >> as smart as they are, they rely a lot on oil production and oil demand and that's not there. >> all right. >> from a macro point of view, it's very propitious right into the christmas spend. if we have low gasoline prices, that could help christmas spend. that should be another positive. >> directly into consumers. you don't have to wait. >> yep. like jet fuel. >> all right. thanks. >> thanks, joe. >> see ya. let's get back to our guest host barry sternlicht. you talked a little bit about the housing market and you have a great idea of what's been happening with housing. you said that's headed up over the next five years, could be a little bumpy. you also have great insights into what's happening with consumers. where do you see things right now? >> well, i want to go back to your last guest, for a second on oil. i think pissing off the saudis

is not a good idea. >> no. >> and we are the low-cost supplier of energy. we can produce energy through our shale and oil reserves, but it's quite expensive relative to what they produce it for. if they wanted to really screw with us -- that's a good word to use. >> they do -- >> they could flood the oil markets. they would be the only guys making money. >> we individually found each of their enemies. >> they can get it out for much less but they have made social promises. they need oil to be around $100 to pay off those promises. >> we hear them, many of them our clients and friends. it's not clear. i mean -- i'm not sure the west didn't make up these numbers to make us feel better. i'm sure they like it and the russians really want high oil prices too. >> what do you think the number has to be at? >> i don't know. i'm just wondering if the number is real. social promise. you'll get your money a year later. they have more flexibility in the oil structure than we do. and it's just, look, our politics in the middle east are

insane right now. our allies wonder what we're doing. how many times have israel and saudi on the same side of the issue and the u.s. on the other side? it's like our economy. it's like it's really strange. go back to the realize markets and you ask me about what are you asking me besides the housing market? >> the consumer. if you're looking at low oil prices, their point was that you're going to -- >> the consumer's pretty okay. we have a very short memory. like the fact our football teams are on the field. so we're shopping. we're about to close on a second fleet of malls. we own 19 shopping centers we've bought in the last 18 months. and the same-store sales up 9% in the mall. so the death of the mall is probably greatly exaggerated. consumers, i'm on the border of estee lauder and i do those to

see the consumers globally. on different parts of the world, he's okay. the u.s. consumer has been -- he's been amazing. it's not healthy -- >> -- retail federation of 3% of gains versus 9% of gains. >> depends where you are. the midwest is doing quite well, the fracking states are booming and the middle of the country and the blue states, which happen to have other issues are not doing as well. and -- but -- and then places where tourists are doing great. and south beach where i was this weekend. i mean, it's booming. and so -- but it's south american shoppers that come with an empty bag. it's kind of -- it's kind of amazing how resilient the consumer is. and, look, there's not a lot of pressures on him, but he's not making a lot more money. and the income growth is -- >> talk about the foreign buyer, where would we be? >> our malls are not in tourist destinations.

lincoln, nebraska, is not a tourist destination, not yet. i think that -- because we are. the midwest is doing quite well. the crops, land prices at all-time highs, midwest, food prices are high. if you look at inflation. yeah, the commodity complex is coming up, not really because the world's not that strong. but food prices remain pretty high. >> and yet the unemployment rate is still stubbornly high. >> well, unemployment rate, we have a problem, we continue to invest in a system that's not working. >> and how would you -- who -- >> we have to invest in education and job training. >> who would you ask in washington to fix the problem? first, who do you assign blame to in the recent mess? was it republican? >> i was a ceo. i go to the leader. >> it's not the republicans in the tea party? >> no, you've got to get a ceo. look, the nation, there's no mandate here. obama seems to be confused that maybe he thinks he won the election 80 to 20, it was roughly 50/50, you don't leave the room until you have a

solution. >> doesn't seem to have any chase for doing that. >> no, he doesn't seem to enjoy the politics of it, which is -- >> doesn't seem to enjoy the actual job of being president. >> i think you have to bring the two sides together and find common areas and have a debate. but there are themes like education reform which i think both parties would agree to. if you can get people jobs, they'll get salaries, pay income taxes and close our deficit. >> they never connect those dots. don't connect dots for the private sector. >> i'd say we lost all common sense in washington. it really is the rise of the middle. the middle needs to stand up and start taking over. needs to raise money around the middle. we need a middle. a fiscally serve sound fiscal policy and we should leave social issues to the state as we have with gay marriage and just move on. >> but we -- >> that's the answer. >> the best entitlement program is the job, right? >> absolutely. >> hold on what? >> the rise of the middle. the question is -- >> we need to rise and give -- >> you need to do redistribution

and -- >> has gone on. >> you want redistribution. >> no. the middle rise up and actually take it over. >> yes. >> that's the whole issue. >> there's an enormous power base that's disenchanted and can't support what i would call the far right, i call the social neanderthal wing and the social democrats that think income inequi inequality. >> don't you think the extremes -- >> i'm going to choose to believe we can change this. it's a great country. >> do you always think tea party is same as the social conservatives? i don't think they're the same party. >> seems to morph. >> it's more about fiscal issues than -- >> if it stuck to fiscal issues, it would get more support. it's the social side that -- look, you can't win an election in the united states with the swing state and blue states without pro choice. you can't win an election, you have to get women and romney didn't get women. and you can't win. the republicans adhere to their

policy the way they do. they should use gay marriage, like a state issue, abortion should be a state issue. if you want no abortions, move to the states don't want. texas, go to texas. if you want to have free choice, women's choice, come to new york. let that be the solution and let's focus washington on issues only washington -- >> growing the economy. creating wealth. >> creating the right incentives. get off the social agenda. stay out of our private lives. >> single-issue voters -- >> yeah, but you can't eliminate by saying to women you can't choose. republicans have those red states they need to get a swing state. on the other hand, you know, some of the left of the democrats have completely lost their mind and we're not france. you do not want us to be france. we operate in france, it's brutal to do business there. and you can't create jobs. it's -- you can't create jobs because nobody will hire. all companies are hiring people in england so they don't have to employ people in france because you can't fire them. if you can't fire a worker in

any country in any business, you can't have excellence and you can't have sustainable growth. i think maybe -- you should never not take advantage of a crisis. this washington crisis is like maybe -- maybe the middle will rise. maybe somebody's voice will be heard. it'll be interesting to see if christie today, if he can run, can he get through the far right of the republican party? very interesting to see. i think he could. i'm not saying him, but a moderate could -- >> right. >> a moderate. >> hillary and bill back in the white house, they understood a private economy. anything's going to be better than this, wouldn't you think? >> between -- you can't do what we're doing. this is not working 52 million people on food stamps and it's more of the same and all bad. you have to address the fundamental issues of the economy. i'm sort of giggling about health care. we're going to talk to josh in a second. you know when he did this, it

was a noble idea, having people on health care, they're getting it anyway. going to emergency rooms. but, it didn't address the cost of health care which is a huge tax on the american economy. and we still have -- we never got tort reform, never got the things that drove up our health care costs way beyond other countries in the world and it's a competitive disadvantage for u.s. businesses. same with our tax code, which is insane. >> right. >> right? these are not that hard. these issues are not that hard. they're not the issues we're talking about. >> health care's hard. you don't think health care's hard? so many other countries, by the way, not only the tort reform in many cases it's single payer. >> in many cases, pharmaceuticals are -- >> if you're a businessman -- if you're a businessman, you look at other places like england and canada and say look at best practices, why their health care costs 11% of gdp and ours are 17%? you go around the world and study -- >> if you're looking at every time you run an mri or a separate test, that is a massive part of the problem. >> but we only dealt with

half -- >> i agree with you 100%. i agree with you 100% the cost curve has to be bent and mark bertolini heaz spoken with us about how they tackle it. >> running hotels, if you don't copay, health care costs will go up 20% a year. and copay 11%, it's still too high. >> what do you think? >> no. >> answer. >> i don't know if i'd try to figure out health care right away. first thing i'd do is bring the money back and level our tax system. >> health care costs are a biggy, though, 25% of g tdp. >> all we did was the first end inning of what we did with health care. and then entitlements. i was listening to erskine bowles the other day and we said 65 was the retirement age when you live to 63.

and now we're living to 77, 78, 79, now you retire at 70. if you created a long-term plan for our economy that had some reasonableness with not fake math, i think the capital markets would zoom. i think we'd have a hell of a run here because there's so much liquidity and so much money that wants to be put to work. and, you know, bernanke and then, i think yellen don't understand when you do qe-3, right, you're telling the world, they're saying it's all good, go out and spend your money, use your cash, invest in plant equipment, but you know they're sitting there with like heroin -- dave einhorn calls it too many jelly donuts. you're going to hold your cash because you think when it ends, it's going to get ugly and you want to take advantage of opportunities -- >> use heroin because you use jelly donuts to make up for cost of gold. >> i'm using heroin.

it has far worse consequences when you get off it. jelly donuts give you a belly ache. you don't know what happens, it feels good while you're on it, i assume. not that i'm a heroin addict. coming up next from twitter to obama care, joshua kushner after the break. "squawk box" coming right back. (announcer) at scottrade, our clients trade and invest exactly how they want. with scottrade's online banking, i get one view of my bank and brokerage accounts with one login... to easily move my money when i need to. plus, when i call my local scottrade office, i can talk to someone who knows how i trade. because i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade-proud to be ranked "best overall client experience."

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we are continuing our disrupter series with one of the most important figures in the new york start-up scene. josh kushner. also our guest host barry sternlicht who is an investor. you look for disrupter technologies as a theme for what you invest in? >> yeah, we feel grateful we've been able to invest in great businesses and our ambition is to invest in entrepreneurs that are trying to create industries or make industries more efficient. so absolutely. >> instagram is one that you

invested in. three days befor instagram was sold? >> yeah. >> how did you see this? how did it come up? >> absolutely. instagram is obviously an incredible product and we invest in the company primarily because we thought it had opportunity to become the next facebook. kevin is an unbelievable entrepreneur and -- >> kevin the ceo. >> and it's definitely proving to be that case. >> were you stunned when it was sold three days later? >> yeah, i was incredibly happy for kevin, obviously. i was excited for him and for the business but i'm just happy it's still becoming what we thought it could become. >> you would have held on it, probably. >> yeah, you know, it wasn't my decision, you know, you have to be happy for entrepreneurs when they -- >> you say your preference would have been to hold on to it. >> no, i think, you know, for me, i'm just happy that instagram is becoming the

disruptive product i thought it could be. and kevin has done an unbelievable job as a ceo still while at facebook. >> we keep talking about obama care every morning. >> sure. >> you're now in the health care insurance business. >> absolutely. >> tell us about it. it's called oscar. >> sure, yeah. the story behind oscar is fairly straightforward. i opened my insurance but one day and realized i had absolutely no idea what it meant. >> you and everyone else in the country. >> i run a growing business, i didn't know what my benefits wither, what doctors or hospitals i had in my network. how to file a claim. and the idea was on behalf of thrive, i spend my days working with entrepreneurs trying to create products that are looking to transform traditional industry. and how can we take this relationship so important from a human perspective and it's one of the largest costs that anyone has in a given year and make it simple and transparent and understandable, relatable primarily through technology, data. >> health care for dummies. >> so we hired you to run the

obama care website, what would it look like? >> different. >> different. >> and probably would've cost a little less. >> might have worked. >> to give the government some credit, you know, building things are hard and the only people that know that are the ones that are actually building things. it's frustrating primarily because what i believe to be such a disruptive policy has been stalled by something that i think could have been a little more simple. but hopefully it'll be fixed in due time. >> with oscar, can you actually see what you're paying for things? that's one of the biggest. i have the same confusion. you don't know what the insurance company's going to cover when you're at the doctor's office. they send you a bill later. >> they tell you what you're supposed to pay. >> sure, the vision of the business is to make this process and relationship just more transparent. so what we're doing is we're using technology and data to kind of educate the consumer so they can make thoughtful

decisions on their own. >> online. it's online -- >> yeah. online. but we have human interactions. >> did you make the investments and found the company with anticipati anticipation? >> yeah, the idea of the business was created before i was educated enough to know the dynamics of the aca. this is a consumer pain point and my cofounders and i started working on this without really understanding the shift in policy and we're really excited and it's been this humbling process to see the talent we've been able to attract. >> we launched two weeks ago. >> it's gone well. >> so far, so good. >> josh, thanks for coming in. >> thanks for having me. >> "squawk box" will be right back. ♪

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hour, our third fed president in as many days, eric rosengren will join us to talk jobs, tapering and janet yellen. it's election day, we're going to tell you what to expect from voters in virginia, new jersey, and new york city. and a power play behind investments in tommy hilfiger, rue 21 and many more. it's a great time to sell companies. the third hour of "squawk box" begins right now.

welcome back to "squawk box" here on cnbc first in business worldwide. i'm joe kernan. our guest host this morning, chairman and ceo of the starwood group. how is he doing now? hanging in there? >> barely. >> barely? send him our best. we had a complete show on -- >> yeah, great show. >> it was a big show. >> yeah. >> wish him well. >> andrew has your morning headlines. we have morning headlines, including a developing story outside of new jersey this morning. a suspect gunman was found dead just a couple of hours ago after at least six shots were fired at the garden state plaza mall in paramus. six rounds after entering the complex around 9:20 eastern time last night. thousands of shoppers fled, no injuries were reported.

scott cohen joins us now from outside of that mall. >> reporter: good morning, andrew, we now have picture of the young man. he is identified as 20-year-old richard shoop from nearby new jersey. reportedly had a history of drug abuse, we're not sure what it was that possessed him to go into the mall dressed in black wearing a biker helmet and starting to shoot. and this is the terror that he wrought. all around the area, including s.w.a.t. teams as the call rang out just before the mall closed last night of shots fired at the mall. hundreds of employees and shoppers running for cover. >> we went and we got locked in the back room, actually. we stayed back there for two hours. we really had almost no clue what was going on the entire time. it was very scary to be honest.

>> it wasn't until 3:00 in the morning when authorities finally found shoop's body in an area that's reportedly was under construction and a lot of the shoppers that had hunkered down were in there until well into the night. this shopping mall is going to be closed for at least a day and perhaps longer than that. police say it was a nightmare scenario that could have been a whole lot worse. >> the only person here who had any injuries obviously is the deceased shooter. we were very lucky and blessed on this. we have trained. we used our training tonight and we were ready for the incident. >> reporter: nonetheless, a lot of questions remain. chief among them, how did this man get into the shopping mall during business hours with a loaded rifle? authorities still aren't sure whether he concealed it or how he got in, but it is certainly going to trigger some review. the owner of this shopping

center westfield says the security is heightened and will remain so in light of this incident. back to you. >> okay. scott, thank you for that report. and we're going to continue to monitor the story throughout the day. also in global market news, china central bank says it's going to be maintaining current policy setting with fine tuning to keep the economy on an even keel. policy makers also pledging to push forward interest rates and currency rates while preventing systemic risks in the economy. how does it say it knows it can do all this? chinese premier says the country needs to sustain economic growth of 7.2% to ensure a stable job market. also, let's get a check on the markets. u.s. futures at this hour have red arrows across the board, dow looking like it's going to open off about 44 points, nasdaq nine points, and s&p 500 off four points. it is also election day. chris christie is expected to win reelection in new jersey. the size of the margin could

make or break his status as the potential gop presidential front runner for 2016. -- gubernatorial race. and in new york city, democrat bill de blasio holds a lead over joe lohta. here is joe watkins, republican strategist and former white house aide to president george h.w. bush. and from washington, michael feldman. he's also a former clinton white house aide. gentlemen, welcome to both of you. the races today don't look like there's anything that's potentially even close, joe. people are already starting to look to what these races mean for 2016. >> well, clearly the christie race is one to watch. he's been comfortably ahead most of the time. but the way democrats in the state of new jersey feel about him means that chris christie could be a great candidate for the presidency if he wishes to run for the presidency.

new jersey democrats are so locked in for chris christie because he's a straightforward guy, gets things done. the country will like that too if he decides to run for president. no national democrats were sent into the state of new jersey for barbara buono, his candidate, his opponent. that's how -- >> why do you think that is? >> because chris christie was so strong and so locked in -- >> you don't want anybody -- >> absolutely. wasn't worth the time. in virginia, it was a different story. you've seen president obama, you've seen former president clinton. you've seen secretary, former secretary of state hillary clinton all come in for terry mcauliffe. >> of course, former dnc chair. >> which he can call from. hey, michael, how do you see things shaping up? and what do you start thinking about for 2016? is it hillary clinton who is going to be the nominee, you think?

>> well, look, if she runs she'll be, you know, the front-runner if not the presumptive nominee from the standpoint of name recognition. her network, her set of experiences which are unique. the historic nature of her candidacy, all of those things. i agree that today sets up 2016 in a couple of respects. and actually, what joe said about governor christie is absolutely right. he is extremely popular in new jersey, he's going to be able to say he's a republican governor that's able to win with huge margins in a blue state. the real question is, what happens when he gets outside of new jersey. and there are some early warning signs there. we're not sure how his politics are going to play, you know, in the middle of the country as opposed to on the coast of the country. i'm from philadelphia, you know. i kind of get chris christie. >> good place to be from. >> yeah, exactly, joe. and we get chris -- and i actually think he'll do very well early on in the invisible primary as we like to call it. he's going to raise money, have support. the media will love him.

the question is, how does he fair among voters. and first and foremost, how will he do among conservatives who are skeptical right now? >> from the standpoint social conservatives, maybe there's skepticism. i think at the end of the day, the country wants somebody who is going to get things done. after all these years of presidencies where nothing has gotten done. we've had logjam, terrible partisan bickering. and at the expense of the country. i think americans are so hungry for a president who can get things done, get us moving, who could work with democrats and republicans to get something done for americans. that's very, very attractive. and that's what chris christie brings certainly as governor of new jersey and i think a lot of americans think he would bring that as president of the united states. >> look, there's no doubt, by the way, he has appeal in the center and that could be hugely powerful in the next presidential election. this idea of not necessarily being beholden to either party.

you have to look very carefully. this guy is not vetted. he's vetted in new jersey. there's a new book out that everybody's talking about, this "double down" that shows there were some real questions about his record in the vetting process that went on in the vice president's election process back in 2012. you know, people are going to learn a lot more about chris christie in the coming weeks and months and i think that may have more to do, more of an impact in his ability to get the nomination. >> do you worry about the primary? does christie have to run too far right? or would he be accepted through the primary system? >> that's been the big problem, big challenge for republicans. nominee ends up having to run so far to the right that by the time that the person gets ready for the general, they have too much ground to make up. i think chris christie may have had some help this time. if there are enough people running from the right. if you find the right is overloaded with candidates. and they all run and cancel each other out, that only helps chris

christie. a crowded field doesn't hurt a candidate like chris christie and i think republicans are hungry for someone that can actually win. they don't want somebody who is an ideologue. >> how many times can you do that. maybe the left -- but sooner or later, they figure out, if we keep doing this and win the general election, maybe we should -- if you hit yourself in the head enough times, you don't do it again, do you? >> well, you hope not. there are some people in the party -- >> would they run ted cruz at this point or rand paul? >> well, first of all, i know ted cruz was born in canada. i don't know if that disqualifies him from running for the presidency of the united states. >> okay. >> if he were a candidate for the presidency, certainly he would have a following. but ted cruz will probably be crucified by other conservatives in the campaign, like rick santorum who wants to run again. >> but do you think it'll be a

replay, joe, where christie is not -- if he comes out pro, you know, if -- pro marriage equality, pro choice, whatever, will that -- will he lose iowa, new hampshire, the primary like that? >> it becomes hard to win some of the primaries because of the base that shows up in these primaries tends to be right of -- >> a lot of times they don't have staying power anyway. >> they learned, didn't they? >> well, i think they know that, like, christie's appeal, i think, he doesn't seem like he's beholdened to anybody and he's fresh. he says what's on his mind. >> he's authentic. >> i wonder -- >> well, no, i think at the end of the day what saves him is he's honest. it's as hard to peg him -- >> it's fiscally -- >> it's the money of the conservatives of the republican party that drive those primaries. if the money comes out to the

middle, like more liberal end of the republican party, the centrists come out. we come out to support that, i think you could see a shift. >> the only way the republican party survives. >> i'll tell you what i think. >> not really, what i think he is a -- a guy who appreciates -- >> certain people would say that's not okay. >> we don't mind paying more taxes if the government used the money properly. >> i agree. >> i think it'll be all jobs. we'll be back talking about private sector jobs which is -- it's lost in the -- >> we should be. >> well, that's been a little bit back burner, hasn't it, for five years? >> guys, we sit around the table at this point in the process and we tend to talk about things like who will they nominate? will people be sensible? will we be able to nominate someone who can pull together all these threads and ultimately win a general election? here's the reality, the nominating contest, electorate is made up of activists and the energy in the republican party

right now is coming from the extreme, not the center. so the biggest problem that chris christie has is not in raising money, he's going to raise a ton of money. the problem he has is in iowa as you point out, in south carolina, in places, where people may be much more attracted to ted cruz or rand paul than they are to a governor from a blue state who just sounds maybe a little bit too moderate to them. >> all right. >> michael, you're laying the -- i love the way you did that. did you hear that? he laid the -- just so far in advance of when we're going to be talking about this. you did too. and then i thought about, you did too. both of you guys are like -- >> obama did that in the 60 minutes interview. romney care and how great it was. he did that. >> all the things i need to worry about with christie right now. and you already have, though, for me, with the book? >> joe just made me check where ted cruz was born. >> yeah. >> he's canadian. >> well. >> but he was born to u.s.

citizens. >> to an american mother. the father from cuba. >> okay. >> thank you. >> thank you. coming up, we're going to talk about our what's working series. it's going to continue with an international investment idea from the auto and health care sectors. and then later, john megrue has invested in a familiar name, tommy hilfiger and rue 21, he's joining us at the bottom of the hour. mine was earned orbiting the moon in 1971.

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our next guest has $10 billion -- the did you bring any? you the didn't bring any of the 10 billion. the lead portfolio manager at scout international fund. is there a place in the world that in the last three months has become much more attractive for scout? >> europe in general and germany in particular.

>> why germany? >> well, they're the leader of europe. >> but they're -- suddenly we don't like them because they have an export economy. >> well, they've got an export economy like china and their own political problems where angela merkel won the election, but part of it was at the cost of her junior partner. now she's got to make a deal with the socialists through the greens they still haven't worked that one out. it isn't perfect. but the things like in the auto industry germany dominates the auto industry. >> what are the themes. are there the same themes globally you're using to find attractive companies? does it matter? >> well, some of -- yeah, there's global themes. and one of which is we like consumer, discretionary and autos in particular. there's a pent up demand. in this country we're seeing it being met in the -- in europe. they're still crawling out from under their recession, and they, unfortunately, also have a substantial overcapacity.

but the german firms are the ones in a position to do well even though, i think bmw reported disappointing earnings this morning last night whenever. but volkswagen has been our preference. >> tesla is beating bmw. >> do you take into account the currency? do you have a view on the currency? do you hedge it or let it go? >> we don't do any hedging. but it's something in the back of our mind in the sense, you know, where do we want to invest? the auto theme has been japan automakers. because their currency's coming down. the u.s. earnings are worth more. their exports are better. >> who missed yesterday? nissan? >> nissan missed yesterday. yeah. >> fuji? >> fuji heavy in japan. and one of the interesting areas doing well here and in europe is auto parts.

we've got auto parts out of canada and continental out of germany that has -- they're just continuing to roll along. and you were talking about tesla. and the auto parts people are in the middle of this automated car process of making cars, you know, stop before you run down the little kid and stuff like that. >> did you see that bmw that gets 98 miles to the gallon? >> yeah. >> amazing. >> it's amazing. >> how about health care? doesn't look like you're embracing it. aflac is a special situation. it's japanese exposure. >> it's also an interesting play on our medical changes here. they're setting up an exchange to sell their products and also tie into some medical product companies. they see people buying the low end, the bronze plan and they -- >> getting a supplemental? >> getting a supplemental. this is the model in japan where

the social security administration pays -- like 30% copay. so people buy supplemental insurance. >> is insurance not covered in japan with the basic plan? why is cancer insurance such a good product for us? >> my understanding is the japanese have a fear of cancer. >> and so they buy -- >> so they buy -- >> if it's in germany, we should call it buy, shouldn't we? although it's payer. >> right. but we call it bayer. >> we like that and they've got a couple of interesting drugs coming that are new in the market and cancer treatment drug. they've got issues of, i think, beralto or something like that a drug that's gone off patent, but

they're biologics which are hard to make and so they're a lot less vulnerable than your basic chemical, your small -- >> and do you own any mexican bank stocks? >> no, but i see you like one. it's the third largest there. it's kind of the independent, i think the largest aside from citi corp. and bb of a. >> in fact, they lent us money, i just forgot the name of it. but he has a bank. and his son runs it. tony. >> we think part of what's changed in mexico is the government there is -- i mean -- >> an example of a very good leader helping reform mexico with policies. >> right. positive. >> opening up the energy sector -- >> what a concept. >> and frankly, they're going

after the monopolies. >> so you -- you know, one of the things in real estate, it's interesting your themes. we're looking today, if you look at the new frontiers for us. and mexico, clearly it's booming as the insurance companies reform their investment practices, investing both in mexico and across border. that's all new but it's big, powerful thing. and spain, spain has got a lot of people curious today. and what do you think of spain? because spain has set up their bad bank, banks, i don't see a lot of financials. you don't seem to like the european financials yet. >> well, as kind of the first step in banks. we've traditionally, and in euro land used insurance companies. >> got ya. >> but we've owned bb of a from time to time. it's a great well-run bank. but it's in spain. you know. >> all right. >> thank you. >> you bet. >> appreciate it. >> coming up, our "squawk" news maker of the hour, eric rosengren will be joining us when we return.

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welcome back to "squawk box," everyone. the latest news on the blackberry saga. the global mail reports that canada made it clear that lenovo was not welcome to bid for the device maker. the canadian government did not want a chinese company to buy into blackberry. the paper's reporting as a result lenovo never submitted a formal bid. when we come back, our

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welcome back to "squawk box" this morning.

let's get to steve liesman. good morning to you, steve. >> andrew, thanks very much. i'm here with eric rosengren. yesterday, eric, we interviewed the loser, st. louis fed president jim bullard. and now, what did boston fed do, fiscal probabilities to the red sox? were you a player in the world series victory? >> i'm afraid we can't take any credit, but it certainly was wonderful news that the boston red sox won. >> okay. let's talk about fed policy move very quickly. you said last night at the university of massachusetts that it didn't matter if the fed tapered in april or december. it's irrelevant for the market. >> so i didn't say it was irrelevant to the market. i did say that the difference between one quarter or two quarters wouldn't make a big difference to the total stock of securities that we held. so given that we're close to $4 trillion, the difference of one quarter one way or the other doesn't make a huge difference in the stock. >> you're not talking about eliminating qe. you're talking about reducing it, reducing it over the three

or four-month period. >> exactly, the starting time. >> the fed seemed to -- the chairman seemed to give three tests, fiscal restraint, financial restraint and confidence in the outlook. looks like two have gone away. does that mean you should be ready to taper now? >> one of the considerations we have to have is how sustainable the improvement and labor markets is. and that partly depends on how fast our economy's growing. we've only been growing at 2.2% growth over the course of this recovery. it has meant the improvement in the employment and improvement in markets. we need to see growth closer to 3% than 2%. if we want to get to full employment in a reasonable time period. >> but the third quarter looks pretty good. do you have a -- we've seen estimates for 2.6%. is that a better number you're looking for. >> and some of that's taking away from the fourth quarter and some of that's coming from inventory. if we take the first half and the second half, looks like it's roughly 2% or a little bit above for the second half. that's still substantially

slower than i'd like to see. >> where do we go next year and how many quarters in a row of 3% growth do you need for that kind of confidence? >> i think we need to be confident that we were going to continue to see 3% growth. we may be seeing that fairly soon. we have to see. we should be very data dependent and it depends on how quickly the economy recovers from what's continued to be a slow recovery. >> the market reacts pretty violently any time you surprise it with tapering or not tapering. seems like the market is unwilling to, i don't think incapable, i think the market can understand this. but unwilling to make a difference or differentiate between raising rates or raising the funds rate and reducing the amount of quantitative easing. is that a failure of the fed's communications policy? >> well, one reason i think we're communicating in settings like this is to make it a little bit clearer that there is a distinction between the tools that we have. one of the tools that is the asset purchase program. but the other tool is how long

we keep short-term rates very close to zero. those two tools don't have to move at the same time. in fact, more than likely, they won't be moving at the same time. so just because we decide at some point that we should reduce the amount of purchases we make in long-term securities doesn't necessarily mean we change in the short-term rates. >> you would agree, you've said that before. you would agree your colleagues have said that before. i've agreed, i've heard that before. it doesn't seem like it's sinking in. is there some other way that markets can be told to understand this thing? or is it just something you can't do? is it too complicated a policy? >> so i think it has been a complicated policy. so one of the challenges is we've not been in a situation where we've tried to exit from a large balance sheet before. and communications is a very important part of that. so we're working to get the communications better and be as transparent as possible. but there's still been challenges as you've pointed out. >> what is your forecast for the funds rate. how low will it be in your

opinion? >> my expectation is the fed funds rate is going to remain quite low for quite some time. we're going to have to see much faster growth than we're currently anticipating before it makes sense to raise short-term rates. i would expect that we would be getting certainly below 6.5%, which is the threshold we've provided. but my expectation is that we'll still have a very low inflation rate at that point. and as a result, we're not going to need to be in much of a hurry to raise short-term rates. >> does -- i mean, we've seen even the vice chairman said there could be zero in 2016. are you a subscriber to that forecast? >> it's data dependent and depends on how the economy evolves. you could easily imagine if we have relatively slow growth even if it picks up from where we are now that it could be 2016. you'd certainly need to have growth 3% or faster if you wanted to be seeing short-term rates rising at that point. >> dial it back a little bit. is it your expectation that the first quarter is a better

quarter to be thinking about when to reduce the amount of quantitative easing? >> i think it's going to be data dependent. my expectation is that the beginning next year, we'll start seeing better economic data. we'll start seeing growth closer to 3%. part of that is on the consumer side, the stock markets, housing prices have continued to go up. we're employing more people. that should result in a better situation for consumption. and also, some of the head winds from fiscal policy, some of the head winds from europe. and some of the lingering effects in the financial crisis should start abating. >> how much concern do you have about the potential costs of quantitative easings? people are concerned about inflation. people are concerned about an abrupt reversal in stocks and higher interest rates. and the difficulty of unwinding it. is that something that's rising in costs as far as you're concerned? >> i think we have to be attentive to the possible costs. so my own perspective is that inflation's not going to be picking up all that quickly.

my forecast would be there'd only be a gradual improvement in the inflation getting to our 2% target. so it's certainly a possibility that it could go up faster than that. but that's not my expectation. the bigger concern, i think, would be how much interest rate risk we're taking on by having a large portfolio of long-term securities and possibly financial stability concerns. >> janet yellen has been nominated to be chair. what criticism of her has been that she is the person who spearheaded the communications policy that we're having so much difficulty with? is she at fault for this? is there something that should have been done differently in your opinion? >> i think we're in unusual times. we've not been in a situation where we've been exiting from a large balance sheet. and as a result, it's going to take trial and error to get the communication correct. i think that's a problem for the bank of japan, it's true for the ecb, bank of england and true for us. because many of our actions have been somewhat experimental, i don't think you can blame it on

one individual, i don't think you can blame it on any one bank. we're going to have to learn a little bit by doing. >> thanks for joining us. congratulations again on the world series victory which was engineered, we understand, guys, right here from the boston federal reserve bank. back to you. >> all right. steve, thank you very much and our thanks also to president rosengren. when we come back, power player on the retailer and consumer. john megrue will join us onset after this. running a successful business. so we provide it services you can rely on. with centurylink as your trusted it partner, you'll experience reliable uptime for the network and services you depend on. multi-layered security solutions keep your information safe, and secure. and responsive dedicated support meets your needs, and eases your mind. centurylink. your link to what's next.

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welcome back to "squawk box." check out the shares of endo. buying canadian peer paladan labs. and i don't know if that's helping endo, which is weird to go up like that on an acquisition. >> 30%. nice. we're going to talk about the cost of capital and deal making with the cost of capital as low as it is, our next guest says the debt market has never been so hot. and his company is now making some deals, putting his money where his mouth is. his mouth where his money is. what's the phrase? john megrue joins us. >> you don't know that phrase? >> i do. >> putting his mouth where his money is. >> what the viewers don't know -- >> i can't do that. >> not for everything. but there was an introduction and it went, like that really quickly.

so i had to ad lib and, then, of course, here is my ad libbing and -- >> we should get to our guest. >> it's good to see you. >> good to see you. >> with debt as cheap as it is, why are we not seeing more acquisitions? lots of sales but nobody buying. >> yeah. well, in a debt market this strong and interest rates are so low, valuations have spiked. it's particularly a tough time. really a tough time to find values that we think make sense long-term. >> are you dumping a lot of stuff? selling a lot of things? >> i would say for our industry, this is a fantastic time to be selling. >> i don't think yours is one, though, has a lot of cash sitting around that needs to get spent quickly. a lot of cash. >> they have a lot of cash. >> doesn't need to get spent quickly. >> is your expectation over the next year or two firms are going to start either giving that money back or trying to extend

out the deadline? what happens to all that money that has sort of a hard stop at the end? >> yeah. well, you don't see much giving it back. you have extension of funds. but the money finds ways to go to work. in spite of the fact that valuations are up and i think we are in a tough time in the cycle. >> does that mean we're going to see a number of challenge deals? >> well, there's always -- >> challenging deals. given that prices are where they are? >> yeah. well, this is a tough vintage. our business is so long cycle. we buy something, it's not like buying stocks, we're in five or ten years one way or the other. and you do need to be cautious about vintage. and piling in all in one or two years and doing it at the peak of the market. >> right. >> how do you feel about revenues? when forecasting companies today, you do a lot in the consumer space, how do you feel about the retail consumer. do you think he's tapped out? is he going to grow?

i think it's hard to underwrite revenue growth as you're seeing in the quarterly numbers. the revenues are not that strong. what do you think about the consumer? >> well, i think generally the consumer's in a tough spot. but for us, for private equity, we're always looking for, you know, where is it going to be not so cyclical. and so the value and, you know, you look at t.j. maxx, for example, a fantastically run company, it's done well on the turn down, continues to do great. so value, luxury, high-end products. we just bought a company cole haan part of nike. >> discounted shoes now? >> exactly. >> give you guys friends and family cards. >> okay. >> in situations like that, it's an undermanaged asset. it was so small and you had a great heritage brand. >> what did that cost? was it public? >> yeah. we paid $580 million. >> seems like a good deal. everyone knows cole haan. >> does that mean the middle gets left out again?

we keep talking about the mid-level consumer. is that the weakest point right now? >> yeah. it's very tough. it's very tough. and you see that across the board in walmart's results. >> yeah. >> and everybody else. there continues to be a bifurcation which is big -- >> why does t.j. maxx do well and walmart doesn't? >> t.j. maxx is the deepest value. as people fall out of the middle income to lower income, there they go. >> nike still make your soles? >> he's talking about shoes -- >> that's a good question. >> that's a nice shoe. >> you don't make it anymore. i need it. i keep having it redone. >> what happens to the technology in the cole haan shoe. >> don't worry, we still have the air technology. we've licensed it for a period of time and then we get to put our own air in. >> i didn't know that. >> that's a -- >> when you look apax is a global firm, are you finding better opportunities in europe or asia? as a firm as a whole, where do you think the incremental dollars are?

where are the best opportunities for private equities today? >> europe's interesting, there's not a lot going on there in private equity. we bought a company from france telecom. and, again, classic undermanaged, not to pick on france telecom, but it's not exactly a stellar managed company. so when we buy a business like that, we put a new management team in place. and they really make a lot of changes which drive the pop line, completely change the bottom line. i think particularly right now there's value in china, india and brazil. you know, you look at the way the markets have corrected over the last two and three years on a growth adjusted basis. we have china -- >> have you done a lot of deals in china? >> yeah. we do, you know, companies like we bought the largest ecom player in the real estate industry. if you're trying to rent or buy apartments. >> in china. >> yeah, in china, six times larger than the next player. and like most markets, these are winner take all categories, right?

>> what's the biggest transaction you can do in this environment right now? i mean -- >> yeah. >> the megadeals that we saw start of 2007, 2008, is that doable again? >> yeah, absolutely. you know the markets are -- people are looking for yield. we just refinanced the company and cost of capital was 5.3% and then after tax call it 3%. it's unbelievable. >> are you worried like he is about the -- you say the fed's going to be there for a while. he thinks it's going to end badly. you? >> no, i said -- >> the patient could go through convulsio convulsions. >> that's not badly? >> you know, sometimes you recover. >> like you, i'm worried. you know -- >> okay. >> these corrections when they happen usually happen instantaneously, you never know when, there's a lot of smart people at the fed trying to figure it out. you know, and i think there are major, frankly, political issues. i think the policy issues to

solve how to get out of this are fairly straightforward, but the politics of it with, you know, the keystone cops in washington and the democrats with no plan and the republicans shooting at themselves. you know, it's just a circus right now. how to get out of it is going to be a very tricky thing. >> you should run for office. >> he does amazing charity work, by the way, he's done a great job with u.n. and africa and millennia promise. he's not only a great businessman, he's a great person. so he -- it's -- it's an interesting world today. the private equity, there's -- you know our business is tough when we raise money so easily. >> there's not as many opportunities. >> that's the problem. money, less opportunity. >> thanks for coming in this morning. >> thanks. appreciate it, guys, thanks for the invitation. when we come back, we have several stocks on the move ahead of the opening bell. we're going to check in with jim cramer. plus, don't miss "squawk box" tomorrow, we'll be talking with

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let us go to the new york stock exchange. earnings stream is slowing down a little bit, jim. i'm thinking about the news flow and where you want to go with is this today. what are you going to be talking about at 9:00? >> there are three stocks defining this market right now. twitter will come and i think everyone has to be a little careful. then there's solar city and tesla. she's stocks trade up every morning on whatever kind of news there is. these of cult stocks. people don't like me to use that term. they want to say go buy tesla. you and i know that these things can last a lot longer than people realize. >> they can. i saw the solar city news. it had to do with a financing arrangement, right? that normally would make me worry if the stock got a big bounce on that. >> right. solar city can come out tomorrow and say, listen, they have found a if you way to be able to aim solar panels that brings

in 1/100 more energy -- >> i'd rather have that than have people take stuff that might not be economically viable, flight. >> there's a good story in the today about tesla, how tesla is going to sell many more cars and it's kind of like, no kidding. that's why the stock is where it is because they expect people to have you do a low number so we can do a big number today. it doesn't matter, people are going to love it anyway. >> i'm wondering if there is another leg up. just the s&p, i'm wondering where it comes from. we're in a quiet period. we're through earnings right now. we figure the fet is -- we know they're going to keep it coming, at least probably until next year so what happens now? >> i saw cvs report this morning, walgreens reported a monthly number that was good. the way ups and fedex are

trading, the f-corp yesterday. the thing is soaring. i think that's going to be the unexpected area that takes off next. >> maybe $3 gasoline will make this a better christmas. it might be that simple. because that happens immediately, right? it's in your wallet that day. >> remember how much we worried about how much they take from the payroll tax. we have no energy policy ourselves. >> we'll see you in about 16 minutes. >> thank you. >> coming up, our guest host this morning will get the last word when "squawk box" returns. it grabbed the patient's record before we even picked him up. it found out the doctor we needed was at st. anne's. wiggle your toes. [ driver ] and it got his okay on treatment from miles away. it even pulled strings with the stoplights. my ambulance talks with smoke alarms and pilots and stadiums. but, of course, it's a good listener too.

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recovering, texas is solid in recovering. that's one component of people how they feel their home values are going up, they feel good about that. and then you also have oil prices and you have a stock market that's raging out of control. i think it's an area, greenspan said irrational exuberance. you have to look at the market and it's tough to short. people are getting unravelled on their shorts and they can't keep one an s&p that's up 24 or something. i think it's really bad. we are seeing speculation entering the markets people can borrow almost for nothing. so when they can't borrow for nothing, do they sell their stocks? and the stock market capitalization is nearing all-time highs as percent of gdp -- >> so are you going to get out of the stock market or lighten the load? >> when the money managers get

paid, the hedge funds we invest with, i think you can see people lining up positions -- >> why wouldn't you play through that knowing what -- >> we've seen the end of that movie before. >> these going to keep rates down, she's not looking at the 7.2, she's going to look at the 14, whatever that number is. that's good but i think this is a tough market for really -- for investors. because you're nervous about deploying capital when you know rates are being subsidized. you don't know what five years looks like, you don't know if we're going to have a comatose economy or is the economy going to be galloping along fueled by inflation or the world picks up, that europe fixes itself overtime -- >> does that mean you sell stuff in the market or -- >> i think you very carefully look at your positions and pare

them back. i think i'd build liquidity. i think you're going to have an election that's a brawl if the republicans are successful taking over the senate. the markets could have quite a spit -- >> i'm sorry, the democrats take the house. it's going to be interesting. what's most interesting is nobody woonts to deal with it anybody. businesses want to ignore washington, tell us the rules of engagement it, will operate. they still can't have dodd-frank worked out. enough's enough. we just need certainty and we need some common sense and rationality in washington. if we do that, this is so exciting. i work with people like josh kushner and i actively invest in silicon valley. technology today, the kids are amazing and so good. >> they only have to figure out dodd frank and obama care. maybe they should come in on weekends or something. those are the only two things

that are sort of looming. >> if the government was a public company, i mean, public companies change their software -- you obviously would fire the ceo if you had obama care. >> barry sternlicht, thanks for being here. this was a lot of fun. >> "squawk on the street" starts right now. >> good tuesday morning, welcome to "squawk on the street," i'm carl quintanilla, david faber and in europe some very weak action in the banks as we see more hand wringing over the rising euro and predictions ove